Most Americans have never heard of Venezuela's great Guri dam. Completed in 1978 with 20 generators and 10,200 MW of generating capacity, at one time it had the most generating capacity of any hydro dam in the world.

By way of comparison, the Three Gorges dam in China is to produce 22,500 MW when completed next year and the U.S.'s Grande Coulee which dates back to 1942 can produce 6,800 MW. If you disregard the ecological damage caused by great dams, they can be wonderful things for they produce prodigious amounts of emissions-free energy at very low cost --- provided, of course, it keeps raining in the dam's watershed. Until recently nobody gave this much thought until last summer when El Niño, and perhaps a touch of global warming, started doing funny things to Venezuela's weather.

The rainy season in Venezuela which refills the reservoirs runs from June to October. The summer of 2009 it was a catastrophe. Rainfall was only about one third of normal so that by last fall alarm bells began sounding as it looked as if the water could fall to the level where the dam would have to shut down most of its generating capacity. The Guri dam has a lower and older generating hall with much less capacity than the main hall and there are two smaller dams located downstream from the Guri. The problem is that if they have to stop letting water through to the turbines in the main Guri dam, the water is no longer available to the downstream plants so their output drops markedly too.

Now, if you are wondering why a falling water level in the Venezuelan highlands should be if interest to Americans, the answer is easy. Despite years of political tensions between the Chavez government and Washington, the U.S. is still importing some 800,000 barrels a day of crude from Venezuela. Should these imports go away, it is likely to come suddenly - shipping oil from Venezuela to Louisiana only takes two days -- we are going to see an instantaneous jump in gasoline prices. Given that the U.S. is at the top of President Chavez's least favorite countries list, it does not take much imagination to figure out who would be shut off first if exports have to be curtailed.

The length of any shutdown would be dependent on rainfall in the Guri's watershed. This week 600 m3 of water per second is flowing into the Guri reservoir and 4300 m3 per second are being released to generate power at the Guri and downstream dams. At the height of the summer rainy season, up to 12,000 m3 /second can flow into the Guri reservoir. However, unless heavy rains begin in the next six weeks or so, much of the dam's power production will have to be shut down somewhere around the end of May.

If this happens, the Chavez government will have a very serious problem. The country has already been enduring rolling blackouts for months in an effort to reduce electricity consumption. Major industrial enterprises have been closed. There is much unemployment and the whole nation was forced to take a week off work over Easter to reduce power consumption. A recent currency devaluation has run up prices of imported goods and the first signs of social unrest are starting to appear. Should electricity production drop 50 percent or more, there is no telling where all this would lead in terms of oil exports and the cohesiveness of the Venezuelan society.

Despite constant government assurances that most of the electricity used to pump and refine oil comes from dedicated thermal generation plants, it is difficult to imagine Venezuela's cities enduring lengthy power outages for very long while the refineries and oil export pumps continue to hum. The choice between 27 million outraged people, 93 percent of whom live in urban areas, taking to the streets or cutting oil production so that power can be diverted to ease life in the cities is not a hard one. If significant social unrest does occur there is obviously a risk of reduced oil production.

A second problem for the Chavez government is that this crisis may not go away anytime soon. While the summer rains are likely to allow the Guri dam to resume production, the key question is how much the reservoir refills before the dry season starts in October. It will take some prolonged torrential downpours this summer to return the situation to normal.

There are many possible outcomes to this story. The best, for the Venezuelan people and U.S. wallets, would be the arrival of heavy summer rains within the next month so that nothing would have to shut down and the oil would keep flowing --- until the next drought. At the minute the government is scrambling to import additional thermal generating equipment, but building and integrating such facilities into a national grid is usually measured in years and not months.

At the other extreme, the drought continues so that some shutdown of power generation is necessary later this spring and the Guri's water level builds slowly over the summer months as large inflows never materialize. Because Venezuela has parliamentary elections (Chavez seems to have made himself something close to President-For-Life) coming up in the fall, the government will do everything in its power to ensure that the lights are on for Election Day. Should extended blackouts occur, there would be paralysis in the cities; factories would close; water, food, communications, and transportation would be in short supply; and crime would explode. The viability of the government would be sorely tested and it is not difficult to conceive of Venezuela's oil exports dropping precipitously amidst the turmoil

Take more than a million barrels of oil exports a day off the table, and we are likely to see some very high oil prices no matter how much spare capacity the Saudis have.